tv Studio 1.0 Bloomberg September 6, 2015 9:30am-10:01am EDT
♪ emily: he has been dubbed the "venture cowboy," not just for his signature shirts, but for his brash and freewheeling way of doing business. along with bets on uber and instagram, nine years ago he , also wrote a $25,000 check to buy a piece of twitter. then amassed so many outside shares, he was the biggest outside investor by the time of the ipo. he recently made news by outlining his vision for the future of twitter. even addressing the possibility that twitter cell to a bigger company like google or facebook. i sat down with lowercase capital's billionaire founder chris sacca just days before twitter's ceo dick costolo
announced he was stepping down. thank you so much for being here. chris: it is cool to be here. i hope you don't mind me calling you brash. chris: no, i think that's probably accurate. emily: you just released a 8500-word missive about twitter. what twitter can be. before we cut to an ad for a medicare sponsored scooter, what is twitter's future? chris: 8500 words sounds like a term paper. but i had been invested in twitter since the first time anyone could invest in twitter. i have been a user since 2006. i have been obsessed. it is a huge part of my business. there have been more than one billion people who have tried it and not stuck around. twitter needs to be easier and more exciting and less intimidating for those people. emily: what has been the reaction from twitter? have you heard from dick? chris: no, i haven't heard from dick since i posted that. just to be clear, i don't talk to dick that frequently anyway. we are pals. it is not out of the ordinary for me to not hear from him. i talked to a bunch of other
people at the company. it was a really well received post, that i think, done right, sets them up for success. it points wall street in the direction of this is how you should be evaluating the company. you should not be out there headhunting the ceo, you should instead be focusing on these things. and if they execute all of the stuff that i laid out there, then no one would be asking the question about whether dick costolo should be ceo anymore. emily: what is the problem and what should twitter do? chris: right now, it is scary to tweet. and when you do, it feels kind of lonely. they need to do a better job of making it the kind of place if you do not do a lot of work, you can find the tweaks you want. you can follow tweets related to the game, the election, the protest. time for the heart. emily: you want a heart? instead of a star? chris: i want a heart. you use periscope. the endless stream of hearts is an amazing feature. emily: the hearts do make you feel good. chris: it makes you feel
good. acknowledged, heard, valued. but "favorite," it is like, is this really one of my favorite posts? so for most people, they do not do it. emily: dick costolo was on the show, and he said twitter is the very best way to connect to what is happening in your world. confident that that is what twitter is and everyone at the company is confident that this is what twitter is. is that enough for you? chris: mission statements and taglines i think usually leave most people feeling empty-handed and directionless. it is a complex product that has to appeal to myriad audiences. who use it for many different reasons. i don't think a single tagline is going to do it. emily: you have been waving the pom-pom for nine years. you have got a room in your house painted aqua? is that true? chris: yes. we have a twitter blue room in the house. twitter has been good to me over the years. emily: why now? chris: why speak up about it now? emily: yes. chris: the way i see it, i think we have the team to execute on this stuff. i think dick finally has his squad. emily: why do this publicly?
why didn't you pick up the phone and call dick? why not email them? chris: i have. i wanted to take a shot at doing it externally. the audience important for me was those working at the company, not just senior management who have been working there a long time that are just, "yes, yes, yes." if the company starts delivering on it, i think everybody wins. emily: you are not an engineer, you're not a product guy. why should they listen to you? chris: good question. i do not know. i have a good track record that has worked out well. uber, kickstarter, gawker, i would like to think one or two of them i be lucky, but at scale, it is probably not an accident. at the same time i think you , have to trust your own intuition as a person. i think one of the most interesting challenges in silicon valley is that the people who are not your users do not have any voice. that is one of the challenges that all these companies have to start incorporating. this is a company that has the potential to be bigger and more meaningful than a facebook.
look, if dick executes on this stuff, then that is the ceo of this company. emily: have you talked to the founders? i know you're close to ev. chris: i have not talked to jack recently. i actually bumped into ev on the way to the studio. i can say that many of those things were not my original ideas all, but ev and i have discussed while he was working there are things that i believe that ev would believe are worth doing. the ideas i shared are not the five-year future of twitter, it is where they should be now. they have lost years and they are just playing catch-up. emily: google buying twitter. is that realistic? chris: i think it is really realistic. emily: but speculation about this has been going on for years and it has not happened. chris: if google were to buy twitter, it would instantly fit and improve the stuff google has. this board, there is no one that says we have to be independent forever. there is no one who owns 50% of the stock or somebody who could block a deal like that. emily: you think google would
realistically buy twitter? chris: i think google would love to buy twitter. i think they never got social personal identity, real time, or anything, they haven't nailed that. that said, zuck would not let twitter go to google without putting in a bid. there is just no way. emily: you think zuck would bid for twitter? chris: zuck looks at twitter and sees so much potential in it. i remember his old goldmine? that has not changed. from people i know who are close to him -- i have not heard this from his own mouth -- but his perception that twitter is not doing everything they could has not changed. he would love the opportunity to own it and to improve some of the things. then you have satya up at microsoft who has used it, watched it. back when we did the search monetization deals when twitter first started selling some of its search data to partners. it was satya who came down from microsoft who came down. he sat across the table from me and dick costolo. i think alibaba may be interested, too. emily: you think facebook,
microsoft, alibaba, all want to buy twitter. chris: all those companies would benefit strategically. all of those companies would all be able to explain to their shareholders why they would pay a lot of money for it. and it would fit into their companies without blowing out or competing with something. emily: what about apple? chris: i do not think apple cares. i do not think it is in their bones. i do not think they care enough. apple, with tim cook, goes in a different direction. as much think they care about the human or social elements in the stuff they are building. i just want to be clear about this, though -- i don't think twitter should sell to them. there is literally unlimited potential in what twitter can build to get to a few hundred million more people. if they do that, the stock will be trading in the $70's, $80's, and $90's. that is why i am not campaigning privately or publicly for it to be sold. if the board stops believing that at any point, i don't see anyone on the board that would block that sale to someone who think they can do a better job of it. i think sometimes when the founder is still running the
company, people just defer to their judgment. i think you are allowed to be weirder it a little more eccentric. people are just like oh, that guy, he sees into the future. i think because dick doesn't have the benefit of being the founder, people do not give him that benefit of the doubt by default. emily: what if some of the things you suggest don't happen? chris: if they do not happen, the company will just go sideways. the stock will go sideways, there will be more distraction. people calling for management heads. it will be harder to land the talented people they want to work there. so of the things not working, user growth isn't accelerating, revenue isn't accelerating as a result, they should give the company to someone who can do better with it. emily: do you have a preference among those? as an investor? chris: no, i don't. i mean, if this company has to sell to one of those companies, to me, that is a letdown. when facebook tried to acquire twitter, jack and ev went down to a meeting with zuckerberg. when they came out of the meeting, they called dick and i for advice. we happened to be in hawaii. there we are on a speakerphone. we are trying to listen to the facebook offer and decide
whether to take it. we just chewed over the terms. i do not think there was any wavering over whether this would be a big, independent company. those guys always knew it was going to be huge. they have always been a couple steps ahead of us in how big it would be. emily: do you want something more here? do you want to be a board member? chris: no, they get my help for free when they wanted. emily: do you want to be ceo? chris: no jesus. , i don't want a "job" job. [laughter] no, i like what i do for a living. we have over 100 investments right now. lowercase capital consists of 3 people. we are one of the biggest funds in terms of money under management, but there is three of us. we don't have office space. my coo works out of the back of a winery that she runs. my partner is in l.a. he just works out of planes moving from portfolio company to , portfolio company. we do it all ourselves. i don't really have an assistant. emily: how big do you think uber can be? chris: that is truly limitless. ♪
chris: i never followed the step-by-step path you're supposed to do to do this. i had no business being a venture investor. i had no business quitting my job at google. i am, like, all right, i am going to strike out on my own, google is getting pretty big. it felt pretty bureaucratic. i am not good at meetings and playing company politics. you know who was, was sundar. we used to do meetings together. i just knew that this guy was going places. emily: he's obviously done well. chris: yes. he will be the ceo of google someday. it was just obvious back in the day that he could be that. emily: what do you think of how he is leading google now? chris: sundar is an incredible compliment to larry. i use that as a foil in the same meetings. it is like he is brilliant, we , both have good ideas, but he can actually navigate a big company, and i can't. i have sharp elbows, i have strong opinions, i'm impatient in ways that -- i am more similar to elon than i am to a sundar. emily: in what way? chris: i am tough to work with. i demand everything to be
exactly right. i grew up with just -- with my parents, excellence was just kind of expected. it was not even demanded. we had to do everything right the first time. emily: at google, you have been portrayed as this guy who maybe would go to meetings and get maybe rub people wrong way. how do you feel about that portrayal? chris: it was accurate. i was protected on high by eric, larry, and sergey as the guy who got [beep] done. that said, i did not fit into the hierarchy. i totally know why it rubbed some people the wrong way, but i stand by the stuff i did to get stuff done. is under pressure because their core businesses are suffering. what do you think about the moon shot? is that what they should be concentrating on right now? chris: yeah, i do. there is nobody here who would tell you that self-driving cars is a small idea and it will not pan out. that could be worth more than all of google is today. the stuff they are doing in health could change the world forever. the stuff they are doing in robotics could change everything. i think where they have dropped
the ball is in the stuff that are incremental from where they are right now. it is a bummer that youtube is not more social. the comments there are a disaster. emily: what about facebook? chris: i've no doubt about facebook's ability to maintain their relevancy and continue to reinvent itself. they have used their market cap to go out and buy the coolest stuff. and zuckerberg knows how to execute that stuff really quickly. he was on top of instagram, and he knows how to close out that deal. emily: do you think kevin sold too early? chris: kevin walked away from that deal, at the time it was signed, something like $300 million to $400 million, which is probably worth around $600 million to $800 million now. you tell me that you wouldn't trade everything you have right now for between $300 million and $800 million. emily: could he have more? chris: i am sure he could have had more. but he could have zero, too. i do not think it is any of our place to question a guy like that. he has the best of all worlds. he sold the company, made a ton of money, and now he has been
left alone to go continue to execute on what he's wanted to do. kevin is having an amazing life. clubs inn -- djing at vegas. i've never seen anyone dress better than that guy. he has his finger on the pulse. he drinks the best bourbon. he goes to fashion week in paris, and everybody falls all over him for how he has changed the world of fashion. there is no -- i don't feel bad for kevin one bit. emily: what about snapchat? here to stay or a fad? chris: snapchat is very real. those guys came up to me after an event i did once and said they were big fans, we would like to sit down. i was like, eh -- i didn't get it. emily: you passed on snapchat? chris: i did not pass so much as i didn't follow up. i passed on dropbox, i passed on airbnb. when i was at google, i told eric not to invest in gopro. each of these times, i focused so much on the negative case i missed all of the positive case.
airbnb founders, i said guys, i think this is really dangerous. i think somebody might get raped or murdered while they are staying at someone's house and the blood will be on your hands, i literally said this to those guys. emily: you didn't pass on uber. you own 4% of the company. chris: i did not pass on uber. i was lucky to be one of the very first investors. i had deep convictions about what it could be. emily: you don't think uber has used very dirty tactics? chris: i don't. i think they have used aggressive tactics. i think travis has been invented in his tactics. emily: how big do you think uber can be? chris: that is truly limitless. i do not think it is worth less than $150 billion to $200 billion by the time it goes public. they are nailing down the food business. that is a whole other business. emily: taking on fedex, do you think that is something they would do? chris: they are delivering packages in hong kong now. there is that cool company, ship. i did not invest in ship because i think it is likely that is something uber will likely do. i don't own postmaid stock or instacart stock because i think it is something uber can and will do. i think travis' ambition is
boundless, but i think his ability to execute on that is unlimited. you mentioned your jam tub, your hot tub in turkey. travis was the unofficial mayor there. you disclosed that you do not talk anymore. why not? chris: i think travis has a personality like mine. we have strong opinions. if i am involved in your business, i will share my opinions about how aspects of your business are doing. they will be very strong opinions, likely in your face. we have a different way of doing it. i think i can rub people the wrong way. it can be pretty mutual. in particular, i wanted to own more uber stock. so i was, at the time trying to , buy it from more people, and travis didn't like that. i think that scratched the surface of more tension that was between us already. emily: have you tried to mend the fence? chris: yeah, i think working together professionally for now is kind of the best way for us to get along. how can i be helpful for uber, what are things i can do?
that is the best way for us to collaborate for now. emily: what is the craziest thing that has happened in the jam tub? chris: the only thing crazy that happen there is travis can stay in a hot tub seven to eight hours. i have never seen a human with that kind of staying power. normal people cannot make it that long. he can. emily: you think lyft is gone? ♪
emily: what do you think is going on right now in silicon valley? we are seeing unicorn valuations. chris: decacorn. emily: decacorn. chris: you know the culture of secrecy we have here in silicon valley. where you don't tell people your numbers, you do not tell the people your business model, you don't tell them about the future. emily: isn't that dangerous? chris: it is really dangerous. the stories of founders making tons of money and living lavish lives and investors doing really attract moreted to and more attention, more and more posers. and with that attention comes sloppy discipline and a ton of money. think to the early days at y
combinator. 12 companies, demo day lasted all day. everyone ran live code. there were 15 of us investing, we could ask questions, walk up and try it during demo day. if the deal didn't get done that day, we could work on it. demo day today, what is it, 80 companies a class? 450 investors. 3 minutes, no live code, and those deals, half of them are done before they even present at demo day. i think overall, it goes to a desperation on behalf of investors to be a part of this game. a lot of companies are raising that probably shouldn't be raising. they are probably not a good company. they are taking money away from companies that should probably use that money. they are taking talent away from companies that could use that talent. they are taking investor and advisor attention away. so i think there is a lot of waste happening in the valley right now. some of these valuations and the accessibility of capital in some of these places is just bananas. it is an amazingly rigged game, the investing game. where this all comes together is i don't think the public market is going to hold up forever. i do not think the global economy is going to support the market being open.
i think by the end of this year, the public market basically closes down for anything with quality lower than an uber, frankly. emily: so what happens when that happens? what do you mean by that? chris: you're going to have a bunch of companies sitting around with no exit path. there will be down rounds. emily: you think by the end of the year, the tide will turn? chris: yes. by the end of the year, the market seizes up. then i think there will be some pain out here for the companies themselves. emily: so what happens to all of these unicorns and decacorns? how many of these are horses masquerading? chris: i think there are naive investors with no discipline, throwing out term sheets at nine figures right now with no diligence. icahn investing in lyft. his publicly stated rationale, if uber is worth $50, then lyft is worth $2. if you really look at this thing, it will not be a two horse race. lyft does not survive, and travis will never buy it. emily: you think lyft is gone?
survives this.er uber is a better company with better mass, better brand, higher pickup times higher , quality of service. emily: you are an uber investor. chris: i am a huge uber investor, but i would be a bigger uber investor right now on that thesis alone. i would never buy lyft shares because they are never going to compete. emily: so icahn made a big mistake. chris: i think he made a big mistake. this is a winner take all game. and travis will take all. emily: isn't going to be a downturn? chris: is it going to be a downturn in silicon valley? emily: yes. chris: yes. it is kind of inevitable that the funders putting this money to work will not see it all back. emily: are we in a bubble? is the bubble going to pop? chris: there are multiple ways to define that bubble. emily: yes or no? chris: yes, a lot of these companies are going to go away. there will be impacts for real estate and stuff like that. do i think it will be like the year 2000, when you can't get a u-haul because they are gone all one way out of town, no, i don't think so because this is the
epicenter of innovation. it is just a little out of whack right now. emily: what you think is the biggest problem in silicon valley that is not being talked about now? chris: there is nobody normal left here anymore. all of the actual, normal, regular people have been priced out. the artists cannot live here anymore. the musicians cannot live here. you do not even meet nurses -- or doctors, frankly, who can afford this city. that is messed up. i just think the biggest problem here is computer science programs are so lucrative now, that kids do not need to pay money to go to them. they do not need to get jobs. so they never waited tables. they have never parked cars. we have a generation of software engineers working at these companies who have very little compassion. we have an increasingly limited worldview that is really out of touch with how the rest of the world lives. i would like to see more people get the hell out of here and be around real people every now and then. we do not have anyone here who represents the voice of the normals, and they are not even our neighbors anymore.
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